John Malone’s Liberty Media has notified the SEC that it has started the process of spinning off its cable assets into a new listed company.
It will perform the separation by issuing stock in the new entity to its current shareholders via a dividend,…
John Malone’s Liberty Media has notified the SEC that it has started the process of spinning off its cable assets into a new listed company.
It will perform the separation by issuing stock in the new entity to its current shareholders via a dividend, which Liberty has said will be worth up to US$4.8bn based on its current share price.
The hived-off unit will be called Liberty Broadband Corporation and cable veteran Malone will hold 47.3% of its stock. It will house Liberty’s 26.4% controlling stake in Charter Communications, set to become America’s second-largest cableco, and indirectly control Charter’s future one-third stake in SpinCo – a new cableco to be created by Comcast that will hold 2.5 million divested subscribers.
In a regulatory filing Liberty said that the new unit would also hold US$300m of debt. It added that the transaction had been structured to qualify as tax-free reorganisation, based on the advice of Skadden, Arps, Slate, Meagher & Flom.
Speaking on a conference call in May, Liberty CEO Greg Maffei said it made sense to spin off businesses that can stand alone and trade well alone. He added that a pure play cableco would find it easier to raise capital.
Given Comcast was unlikely to be able to add more systems, Charter would likely become the “natural acquirer of pretty much any cable asset that gets sold” in the US.
Maffei added that all of Liberty’s cable activities would be simplified by having a separately tradable stock for the assets. In the SEC filing Liberty also said that it would make it easier for the cable side of the business to merge with Charter in the future, should one be pursued. Following the spinoff, Liberty will not hold any of the new entity’s stock, although the companies will have Malone’s ownership in common.
